1 COMMONWEALTH OF PENNSYLVANIA 2 GAMING CONTROL BOARD IN RE: HSP GAMING, LP...

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 SARGENT ' S COURT REPORTING SERVICE , INC . ( 814 ) 536 - 8908 1 COMMONWEALTH OF PENNSYLVANIA GAMING CONTROL BOARD * * * * * * * * IN RE: HSP GAMING, LP (SUGARHOUSE) - PETITION TO INTERVENE IN THE CATEGORY 2 PROCEEDINGS * * * * * * * * PUBLIC HEARING * * * * * * * * BEFORE: WILLIAM H. RYAN, JR., Chairman Gregory C. Fajt; Anthony C. Moscato; Annemarie Kaiser; Keith R. McCall; John J. McNally; David W. Woods; Members, Jennifer Langan, representing Robert McCord, State Treasurer, Robert P. Coyne, representing Daniel P. Meuser, Secretary of Revenue Jorge Augusto, Representing George Greig, Secretary of Agriculture HEARING: Wednesday, January 8, 2014 LOCATION: Pennsylvania Gaming Control Board Strawberry Square Complex, 2nd Floor Harrisburg, PA 17101 Reporter: Lacey C. Gray Any reproduction of this transcript is prohibited without authorization by the certifying agency.

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Transcript of 1 COMMONWEALTH OF PENNSYLVANIA 2 GAMING CONTROL BOARD IN RE: HSP GAMING, LP...

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    SARGENT'S COURT REPORTING SERVICE, INC.(814) 536-8908

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    COMMONWEALTH OF PENNSYLVANIA

    GAMING CONTROL BOARD

    * * * * * * * *

    IN RE: HSP GAMING, LP (SUGARHOUSE) - PETITION TO

    INTERVENE IN THE CATEGORY 2 PROCEEDINGS

    * * * * * * * *

    PUBLIC HEARING

    * * * * * * * *

    BEFORE: WILLIAM H. RYAN, JR., Chairman

    Gregory C. Fajt; Anthony C. Moscato;

    Annemarie Kaiser; Keith R. McCall; John

    J. McNally; David W. Woods; Members,

    Jennifer Langan, representing Robert

    McCord, State Treasurer, Robert P.

    Coyne, representing Daniel P. Meuser,

    Secretary of Revenue Jorge Augusto,

    Representing George Greig, Secretary

    of Agriculture

    HEARING: Wednesday, January 8, 2014

    LOCATION: Pennsylvania Gaming Control Board

    Strawberry Square Complex, 2nd Floor

    Harrisburg, PA 17101

    Reporter: Lacey C. Gray

    Any reproduction of this transcript is prohibited

    without authorization by the certifying agency.

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    SARGENT'S COURT REPORTING SERVICE, INC.(814) 536-8908

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    A P P E A R A N C E S

    OFFICE OF ENFORCEMENT COUNSEL

    CYRUS PITRE, ESQUIRE

    Chief Enforcement Counsel

    DALE MILLER, ESQUIRE

    Assistant Enforcement Counsel

    PA Gaming Control Board

    P.O. Box 69060

    Harrisburg, PA 17106-9060

    Counsel for the Pennsylvania Gaming Control Board

    JOHN M. DONNELLY ESQUIRE

    Levine, Staller, Sklar, Chan, Brown & Donnelly PA

    3030 Atlantic Avenue

    Atlantic City, NJ 08401-6380

    Counsel for HSP Gaming, LP

    KEVIN C. HAYES, ESQUIRE

    Scanlon, Howley & Doherty, PC

    217 Wyoming Avenue

    Scranton, PA 18503

    Counsel for Market East Associates

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    SARGENT'S COURT REPORTING SERVICE, INC.(814) 536-8908

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    A P P E A R A N C E S (cont'd)

    ROBERT J. FITZGERALD, ESQUIRE

    Buchanan, Ingersoll & Rooney

    Two Liberty Place

    50 South 16th Street, Suite 3200

    Philadelphia, PA 19102-2555

    Counsel for Pennsylvania Gaming Ventures

    ALAN C. KOHLER, ESQUIRE

    Eckert, Seamans, Cherin & Mellott, LLC

    213 Market Street, Suite 900

    Harrisburg, PA 17101

    Counsel for Stadium Casino

    MICHAEL D. FABIUS, ESQUIRE

    Ballard Spahr, LLP

    1735 Market Street, Suite 1500

    Philadelphia, PA 19103

    Counsel for Tower Entertainment

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    SARGENT'S COURT REPORTING SERVICE, INC.(814) 536-8908

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    I N D E X

    PRESENTATION

    By Attorney Donnelly 6 - 17

    By Attorney Hayes 17 - 19

    By Attorney Fitzgerald 19 - 25

    By Attorney Kohler 25 - 26

    By Attorney Fabius 27 - 30

    By Attorney Miller 30 - 31

    By Attorney Donnelly 31 - 32

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    SARGENT'S COURT REPORTING SERVICE, INC.(814) 536-8908

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    E X H I B I T S

    Page Page

    Number Description Offered Admitted

    NONE OFFERED

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    P R O C E E D I N G S

    ----------------------------------------------------

    CHAIRMAN:

    All right. Now, having established

    that HSP is the only Petitioner in this proceeding,

    we will begin our final hearing prior to our public

    meeting, specifically the hearing on HSP's Petition

    to Intervene in the Category 2 proceedings.

    Counselor, you're on again.

    ATTORNEY DONNELLY:

    Thank you. First of all, I don't mean

    to --- by using adversarial I'm using it in general

    terms. I recognize --- I agree with what Mr. Miller

    put on the record as to Office of Enforcement

    Counsel's (OEC) role here. I may slip and continue

    to call them as an adversary but I don't mean that

    literally in a legal term.

    The standard for intervention in an

    administrative proceeding, especially before this

    Board, the bar is very low. I do take issue with the

    recitation of what the standard is. I don't think

    that's a standard and I don't think that it's set

    forth in the current version of the regulations.

    I don't think that purports with the

    Bensalem case, which addressed this issue or the

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    Supreme Court's case in Society Hill case.

    Essentially the way I understand what the Court and

    the Supreme Court said and Bensalem said is, you have

    to look at these things two different ways. First of

    all, intervention. At the administrative level all a

    person or an entity needs shown is a direct interest

    and that direct interest can be a competitor. I

    think that was made quite clear by both courts. Once

    you have that interest of a direct competitor you are

    eligible for intervention.

    I'll come back to whether intervention

    must be granted, but it's clear, I think, without

    argument that we have met the standard of

    eligibility. There is a second standard and that is

    of standing, and the standing standard comes in at a

    later stage in the proceedings at a court level. And

    standing --- as OEC pointed out earlier, standing is

    a concept essentially developed by the federal courts

    and imported into the state courts.

    And it has to do with concepts that are

    not present here. It has to do with concepts such as

    separation of powers, whether federal court should be

    interfering or whether a court should be interfering

    with things that legislators do or executives do.

    So, when a litigant appears before a court, the

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    judicial branch, the Court is supposed to put its hat

    on and say, well, I've got to think about who that

    litigant is. I'm one of three co-equal branches.

    And part of whether I hear from the litigant is to

    show respect, be it a judicial respect or a

    Constitutional respect to my other branch. So,

    that's one element of standing.

    Another important element of standing

    that we don't have here, that we don't have the first

    one, is the question of whether or not you have an

    administrative proceeding. In this particular action

    the administrative entity in question is a branch of

    the executive. So, you don't have those --- the

    separation of power issues. Second issue that you

    often see in standing cases is where someone is

    asking federal court to overcome a state court

    action.

    Obviously, we don't have that here. We

    don't have the problems that the federal court

    developed these concepts of standing and adjudication

    based on the Federal Constitution. We don't have

    that problem here because this is all state issue.

    We don't have the federalism issue of standing that

    usually causes a standing problem because no one is

    asking federal court to do anything here. So, we

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    don't have a separation of powers problem. We don't

    have a federalism problem.

    Thirdly, as I think probably more

    importantly --- I may be running too long --- the

    Supreme Court made it plain that those are two

    different concepts. The concept of standing versus

    the concept of intervention. And as the previous

    Applicant made the point that the Court made it clear

    that a person who has a direct interest is to do

    exactly what we're doing here, move to intervene

    before the administrative agency. And once we have

    intervened before the administrative agency, should

    we take a litigated matter to the Court, the Court

    would then apply a different standard for standing.

    And that different standard is direct

    immediate and not being adequately represented by any

    other party. Standard at this level is just direct.

    It's not immediate. It's not substantial. It's not

    whether other parties can represent. So, I come back

    and I think the Ccourts have made it quite clear that

    we have a direct interest in these proceedings at

    Sugarhouse where a competitor would put out a lengthy

    written statement.

    We've proffered a relatively lengthy

    expert report to address the elements of competition.

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    I don't think that this is the appropriate time to go

    into the merits. I know it isn't. So, I won't do

    that, but I do want to point out that in our written

    statement and in the expert report we noted that the

    --- what the legislature of this Commonwealth has

    already recognized, that there is extreme competition

    that has been created in the --- whatever market you

    want to define, Philadelphia area market, the

    Mid-Atlantic or the northeast, since the statute was

    adopted in 2004. New York, as this Board is well

    aware because I know it watches these matters very

    closely, it's coming online now. Delaware is

    expanding. New Jersey just went internet.

    Pennsylvania itself is considering internet.

    Pennsylvania has the tavern bills. Maryland is

    expanding, recently expanded in --- Baltimore area is

    now going to develop a casino outside of the

    Washington area.

    So, we're essentially being surrounded

    by competition, Ohio. All of these factor in. It's

    not a happy situation at all and part of the purpose

    of having someone like Sugarhouse to come in to

    intervene is to try to put those elements forth.

    Now, as I stated before, a couple of the --- my

    adversaries do not object to the intervention. I

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    don't understand that Market 8 or Stadium object to

    intervention, however, they do have conditions that

    they would like the Board to impose.

    There are varying conditions, I won't

    go over them all. You can find them online, but we

    have no problem with agreeing to meet the time tables

    that are set forth with the Board, follow the Board's

    rules and play and color with inside the lines. We

    certainly intend to do that.

    The real objections are --- the

    objections of OEC are essentially that the written

    statement and petition are in some cases hearsay and

    some cases just set forth generalized statements of

    competition. Well, at this stage of the proceeding,

    as I understand your rules and regulations, that is

    what we are supposed to do. We're supposed to send

    in a written statement as one of the adversaries did

    know. The written statement is to put the

    adversaries on notice as to what you want to

    intervene in and what you intend to --- you know,

    kind of giving a generalized presentation as to what

    your theory is.

    If we're granted intervention status we

    will take that written statement, add appropriate

    citations and perhaps alter or amend it as we

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    reserved our right to do, but when it is submitted,

    if we're permitted the authority to submit it, it

    will have --- it'll be a document that at least the

    Board can take, if nothing else, judicial notice of

    given the facts --- for the most part facts set forth

    in there are public record.

    For example, New York just authorized

    additional casinos. Moreover, one of the purposes of

    sending around, circulating the expert report before

    the hearing was to have the expert endorse the facts

    in that --- in the written statement. An expert can

    rely on hearsay in forming his opinions and the

    expert in this case adopted the facts set forth in

    the written statement and added some and, of course,

    gave some preliminary opinions and so on.

    I will kind of --- I think we also ---.

    Not only do we fall squarely into the Bensalem and

    Society Hill case, we also fall squarely into the

    rules of appellate procedure. I think it's 35.28,

    which has directly affected, not directly,

    substantial and immediate. I do want to address ---

    it has three rules there, directly affected, not

    adequately represent and may be bound by the ruling.

    Well, we'll certainly be bound by a ruling that this

    Board makes.

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    We are directly affected. I think it's

    clear under --- under case law I cited. And the case

    law also addressed the general rules of appellate

    procedure. I won't go over it again because I know

    this Board is familiar with both of those cases. We

    fall squarely into that. As to adequately

    represented, we've raised a number of issues that

    have not been raised to my knowledge, and certainly I

    haven't heard or seen written any analysis of the

    competition that's going on coming down the pike,

    what's going on in Atlantic City, what's going on in

    these other states or what's going on in the

    Commonwealth. I haven't seen any of that.

    I have seen that the legislature has

    acknowledged it and recognized it, and is right now

    out with a request for proposals to do a study in

    this matter and to make a determination as to what,

    if anything, the Commonwealth should do to look at

    its gaming loss, that no one is raising. I don't

    believe anyone has raised 1304 and 1330. The two

    statutory provisions that we put forth in our written

    statement, which I believe affects at least three of

    the Applicants and maybe more. There's one of the

    things I put forth.

    I did my very best to dig through the

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    public records to determine what the ownership is and

    the Board has a very good --- but difficult to

    decipher, but very good site to go through that. But

    I do not know and will not know, I don't think our

    client will know for sure, what all these interests

    are until such times as we get into the licensing

    proceedings. In interest of time, we have a way of

    sliding around. There are management companies

    involved. There may be changes in ownership by the

    time we get to licensing. No one has raised those

    issues at all.

    And finally no one's looking at, I

    don't think for Sugarhouse, is that --- Sugarhouse is

    what I used in the petition, it's parties who are

    interested in what Sugarhouse does. We have a number

    of interests. We have interests in people who own

    the property, interests in our employees, we have

    interests of the city and interests of the

    foundation. We have interests of a special services

    district. Just really watch --- I'm sure the Mummers

    the other day, Sugarhouse sponsors the Mummers

    Parade.

    Sugarhouse has to look out --- and it's

    easy to say, well, you're just looking out for your

    profits. Well, we're not just looking out for our

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    profits. As most of the people, a number of the

    Commissioners are aware of, I've spent probably

    35 years in dealing with casinos and a lot of them in

    New Jersey, and I still represent casinos in New

    Jersey. I've seen firsthand what happens when you

    have too much competition.

    There's only certain things that

    businesses can do to survive. They have mortgages,

    they have fixed duties, taxes and mortgages. And

    when there is insufficient revenues coming in there's

    only so many levers that people can pull. And those

    levers I will submit --- and if granted intervention

    our expert in the testimony we'll put in will try to

    point that out to support it. Because those levers

    are not good, in our opinion, for the Commonwealth.

    It causes people to start worrying about capital

    expenditure because you can cut back on something

    like that, start worrying about expansions, start

    worrying about whether you're hiring new employees or

    promoting employees.

    And I've seen it and, like I said, one

    of the statistics I put in with the petition was

    we've seen a decline in revenues there of almost

    40 percent. Almost to the point, five billion to

    three billion. And almost to the same numbers.

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    SARGENT'S COURT REPORTING SERVICE, INC.(814) 536-8908

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    Approximate number of employees go from about 50,000

    to about 30,000. It's not a happy scene out there

    and one of the things casinos can control are

    revenues and may well be determined that there are

    additional revenues, but having additional revenues

    is not a good thing for the long term success in the

    state --- Commonwealth.

    I also want to point out to a special

    interest of not being adequately represented ---.

    CHAIRMAN:

    Counselor, just ask you to ---.

    ATTORNEY DONNELLY:

    I'll speed up. Sugarhouse is currently

    in $100 million plus, almost $150 million expansion

    where we will be adding additional gaming product,

    additional amenities and so on. All this was

    committed to way back when in the initial licensing

    hearings. And so that's another element of not only

    additional competition, but interest.

    I'll wrap up with when I was looking to

    writing the statement I looked through a lot of

    reasons to show a specialized interest and I came

    across --- I looked a lot at economists just to see

    what quotes there might be. One really struck me

    from Kings. Not that I'm endorsing necessarily what

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    he said, but he had a statement that stuck in my

    mind. Something along the lines of two misses for

    the poor are great, two trains for London to New York

    not so great.

    And that's what I think we want to try

    to bring forth to this Board, that adding additional

    supply to this market where there's insufficient

    demand now is not going to be a happy thing we don't

    believe for Sugarhouse, for the rest of the casinos,

    and for the Commonwealth. And for all of the people

    that have an interest in the health and welfare of

    the casino. Thank you.

    CHAIRMAN:

    Okay. Thank you, Counselor. Market

    East.

    ATTORNEY HAYES:

    Mr. Chairman, members of the Board,

    again Kevin Hayes on behalf of Market East

    Associates. Our positions are set forth in our

    responsive brief, so I'll try to be very brief in my

    response to Sugarhouse's Counsel. As a general rule,

    Market East Associates does not oppose Sugarhouse's

    Petition to Intervene. If the Board is so inclined

    to grant their Petition to Intervene we request that

    certain conditions be placed on that, on that

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    SARGENT'S COURT REPORTING SERVICE, INC.(814) 536-8908

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    approval.

    First and foremost we would

    respectfully request that the Board strike the

    written statement which accompanied the December 16th

    submission of Sugarhouse because it is --- doesn't

    comply with the Board's regulations relating to the

    written statement and it violates rules of evidence

    pertaining to administrative proceedings.

    Next, we would ask that Sugarhouse not

    be afforded any participation that is greater than

    the parties themselves. In other words, clearly

    Counsel has indicated that he would like to

    participate in pre-hearing discovery. There's

    nothing in the Board regulations or in the Rules of

    Evidence pertaining to administrative proceedings

    which would entitle them to that and we would

    strongly oppose that. Lastly, any effort that ---

    any attempt to request by Sugarhouse --- and I don't

    know if that's still out there, that they would be

    able to cross examine our witnesses during the

    proceedings, we would respectfully request that that

    be denied as well.

    We think it's clear that the Board has

    discretion in determining the extent that a party can

    participate once granted intervention and we would

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    SARGENT'S COURT REPORTING SERVICE, INC.(814) 536-8908

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    defer to the Board on that. Thank you.

    CHAIRMAN:

    Thank you very much. PA Gaming

    Ventures.

    ATTORNEY FITZGERALD:

    Thank you, Mr. Chairman. Again, my

    name's Robert Fitzgerald. I'm here on behalf of PA

    Gaming Ventures. I don't think I need to repeat the

    arguments and the objections that we raised in our

    answer and objections that we filed on

    September 27th. Suffice it to say that it is our

    position that Sugarhouse should not be permitted to

    intervene in our licensing proceeding for three

    reasons. First, and I think that's a point that has

    been made in most of the objections and answers, the

    so called interests that Sugarhouse has identified.

    Primarily the purported interest in what they call a

    direct and competitive harm that another Philadelphia

    casino might cause can only be grounds for

    intervention if one is to disregard the plain

    language of the Gaming Act. There is and can be no

    dispute that the Gaming Act requires that two casinos

    be licensed in Philadelphia.

    Section 1304 requires that the next

    Category 2 License that this Board issue be in

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    SARGENT'S COURT REPORTING SERVICE, INC.(814) 536-8908

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    Philadelphia. Section 13 --- excuse me. That was

    Section 1307. Section 1304 is even more explicit.

    It says, two Category 2 License facilities and no

    more shall be located by the Board in the city of the

    first class.

    The General Assembly determined that a

    distribution of Gaming and Slot Machine Licenses

    allowing for two Category 2 casinos in Philadelphia

    was necessary to provide Philadelphia, the only city

    of the first class, its fair share of expected

    revenues and development. An unanticipated turn of

    economic events frustrated the first attempt to build

    and license that first Philadelphia casino. As a

    result Sugarhouse has, for the last years --- last

    six years, enjoyed what is effectively a monopoly

    position in the city.

    At its core we think the petition is

    merely an attempt by Sugarhouse to maintain the

    status quo, notwithstanding a clear intent of the

    legislature and the requirements of the law. This

    interest in denying the competition is admittedly

    very real and very personal to Sugarhouse, but it's

    not the legitimate direct, substantial or immediate

    interest that might justify intervention.

    I do want to be clear, the substantial

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    direct and immediate is the standard. That's what's

    sets forth in the regulation. And all of the

    discussion about the federal standard and separation

    of powers, I just don't think it applies nor does the

    standard that might be set forth in the general rules

    of administrative practice and procedure. The rules

    governing this licensing proceeding and intervention

    in this proceeding are set forth clearly in Section

    441A.7Z.

    The second reason that Sugarhouse

    intervention should be denied is because it's simply

    not necessary. The issues that Sugarhouse claims

    that require its participation, the competitive harm

    that we talked about and the enforcement of the

    Gaming Act's ownership criteria will be fully

    presented, discussed and considered at PA Gaming

    Ventures' January 28th hearing even without

    Sugarhouse's participation. The Gaming Act requires

    nothing less from PA Gaming Ventures and this Board

    in that these issues receive a complete hearing.

    Thus to apply the standards set forth in the

    regulations, Sugarhouse's alleged interests will be,

    quote, adequately represented.

    Lastly, Sugarhouse made speculative

    pronouncements regarding the damage a second

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    SARGENT'S COURT REPORTING SERVICE, INC.(814) 536-8908

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    Philadelphia casino will do to the gaming market

    across the Mid-Atlantic and northeast sections of

    this country. At this hearing I need only note that

    Sugarhouse is simply wrong when it suggests giving a

    license to PA Gaming Ventures will fail to meet the

    Act's demands for revenue, development and job

    opportunity.

    I won't spend time on the details. At

    the January 28th hearing, PA Gaming Ventures will

    establish the economic benefits, the operational

    viability and the employment development that will

    result from its building of the Hollywood Casino.

    The salient point here is that Sugarhouse's fear that

    a second casino will result in the demise of gaming

    is not grounds for intervention. It's simply not

    true.

    If I may, I'd like to address a little

    more fully Sugarhouse's alleged interest in enforcing

    the ownership and multiple license limitations in

    Sections 1304 and 1330 of the Gaming Act. Sugarhouse

    directed its concerns to only some of the Applicants

    and PA Gaming Ventures, which is one of those

    Applicants. Again, I don't think it's necessary or

    appropriate at this hearing to show that PA Gaming

    Ventures satisfies the requirements to the Gaming Act

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    on these issues.

    I will note, however, that I don't

    think, contrary to the representation of Mr.

    Donnelly, that this is a new issue that's going to be

    raised by Sugarhouse's intervention. As the Board

    may be aware, PA Gaming Ventures has been involved in

    a number of communications with the OEC to discuss

    its ownership structure, its compliance with 1304 and

    1330. PA Gaming Ventures will be attending a second

    pre-hearing conference with the Bureau of Licensing

    and the OEC on January 14th, and the role that these

    issues may play at the January 28th hearing will be

    discussed at that time.

    Most importantly PA Gaming Ventures

    will, of course, address its ownership structure at

    the hearing and will answer at the time any questions

    the Board and its staff might have. In sum, there

    have been and will be opportunities to fully address

    the meaning and application of Sections 1304 and

    1330. I would only state that the multiple license

    limitations were intended and has always been

    understood to allow for a Licensee to own one-third

    of another license. And PA Gaming Ventures' proposal

    adheres to that understanding and that Penn National

    Gaming, Inc. is only one-third owner of PA Gaming

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    Ventures.

    Of course, there are many details

    pertaining to Penn's control or lack thereof of PA

    Gaming Ventures. On that point, the Board's

    clarifying regulations provide the contractual

    interests including those in management contracts are

    not to be considered when determining ownership

    interests. That's set forth in Sections 441A.17,

    paragraph G and I.

    Even so, PA Gaming Ventures and Penn

    have worked closely with the Board staff to explain

    the details of Penn and PA Gaming Ventures management

    and operations agreements and to explain how they do

    not conflict with the Act's requirements. The real

    point here, of course, is that there's nothing in

    Section 1304 or 1330 that provides a reason for

    Sugarhouse to be a party in the licensing proceeding.

    Clearly the issues of ownership and

    control have been and will be more than adequately

    considered. Sugarhouse can contribute nothing to

    those discussions or to the resolution of that issue,

    at least certainly identified nothing that it can

    contribute. Which brings me to the request for

    discovery.

    Sugarhouse has essentially made in its

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    paper, and I think today, that it does not know if

    there is a problem with PA Gaming Venture's

    application. Therefore, asks leave to find out what

    it can, and this is the definition of a fishing

    expedition. As explained in our papers, discovery is

    unnecessary, inconsistent with and contrary to the

    governing regulations and unfairly prejudicial to PA

    Gaming Ventures.

    We ask for the request for discovery be

    denied and the hearing move forward. PA Gaming

    Ventures --- in conclusion PA Gaming Ventures opposes

    the request for intervention and ask that the Board

    exercise its discretion to deny the Petition to

    Intervene. Thank you.

    CHAIRMAN:

    Thank you, sir. EHL Local Gaming?

    ATTORNEY PITRE:

    Not represented here today.

    CHAIRMAN:

    Okay. Stadium Casino?

    ATTORNEY KOHLER:

    Good afternoon. I'll be very brief.

    As Mr. Donnelly mentioned, Stadium Casino does not

    oppose intervention. The reason for that is not that

    I necessarily disagree with Mr. Fitzgerald or Mr.

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    Fabius, but having been much involved in these

    intervention cases that have been cited in the

    Appellate Courts we see too much exposure on appeal.

    And, you know, simply put we don't want to have to do

    this twice.

    With that said, intervention gives, you

    know, a very limited role under the Board's

    regulations and the statute. There's no right to

    discovery. There's no right to Cross Examination

    under the statute and, in fact, for our Intervenors

    there's no right to even really do a presentation.

    The right is to submit an expert report or written

    testimony.

    We ask the Commission that if they do

    grant intervention, that the participation should be

    limited. As to 1304 and 1330, which were also raised

    against Stadium Casino, whether or not Sugarhouse is

    adequately represented by the OEC and BIE, in general

    they certainly are on 1304 and 1330. As Mr. Donnelly

    may not be aware, those issues are addressed in great

    detail in the suitability reports and I'm sure are

    going to be addressed and represented well by OEC at

    the suitability --- at the licensing hearings. With

    that I'll rest.

    CHAIRMAN:

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    SARGENT'S COURT REPORTING SERVICE, INC.(814) 536-8908

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    Thank you very much. Okay. Tower

    Entertainment.

    ATTORNEY FABIUS:

    Last but not least. Last and least.

    I'll refrain from repeating points of my colleagues.

    We certainly agree with respect to the conditions if

    intervention is granted. I'd like to focus why Tower

    Entertainment is in a unique position. Market

    competition in and of itself is not sufficient

    grounds to establish a substantial, immediate, direct

    interest required for intervention.

    Mr. Fitzgerald already walked through

    1304 and 1307 requiring a second Category 2 License

    facility. The Board is presently in litigation in

    which Tower Entertainment is an intervenor. It's at

    Commonwealth Court where there were oral arguments in

    December. Chief Counsel, Doug Sherman, argued at

    that hearing in front of Commonwealth Court that even

    if all five Applicants were found --- were unable to

    demonstrate the eligibility of suitability the Board

    under 1304 and 1307 would have to put the

    applications back out for bid and attempt to

    effectuate the mandate in 1304 and 1307.

    The significance of that is to the

    extent Sugarhouse feels it's actually injured, the

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    SARGENT'S COURT REPORTING SERVICE, INC.(814) 536-8908

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    correct forum is General Assembly and the text of

    Sections 1304 and 1307. You know, General Assembly

    expands small games of chance, and did not touch 1304

    and 1307, leaving two Licensees in the City of

    Philadelphia.

    A direct interest, which Mr. Donnelly

    concedes he has to demonstrate. A direct interest

    means the matter complained of caused harm to the

    party's interests, i.e., there is a causal connection

    between the harm and the violation of law. To the

    contrary, there's no violation of law. The law says

    there shall be two Category 2 facilities in the City

    of Philadelphia.

    But more importantly the causal

    connection is the statute, not the present licensing

    proceeding. So, there's no causal connection between

    the perceived injury and the proceeding in which

    they're seeking intervention. Therefore they can't

    substantiate a direct interest.

    I would respond to two specific points

    as well. Mr. Donnelly says there are three

    Applicants for which he has explicitly contested

    eligibility, Tower Entertainment is not one of them.

    Tower Entertainment's ownership is not a secret.

    It's on the Board's website, it's Bart Blatstein.

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    SARGENT'S COURT REPORTING SERVICE, INC.(814) 536-8908

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    Bart Blatstein does not have any ownership interest

    in any other casino in the Commonwealth of

    Pennsylvania.

    There's a minority interest under one

    percent of Mr. Robert Bogel (phonetic). He does not

    have any ownership interest in any casino in the

    Commonwealth of Pennsylvania. There is no 1304 or

    1330 issue with Tower Entertainment. There is no

    eligibility issue raised in Sugarhouse's petitions.

    That puts them in stark contrast to each other

    Petition to Intervene that the Board has granted in

    prior licensing applications.

    Parx obtained intervention status in

    Valley Forge contesting Valley Forge's eligibility as

    well as established resort hotel. Mountain View

    Thoroughbred Racing Association obtained intervention

    status in Penn Harrah's Gaming in 2010 on the grounds

    that Penn Harrah's Gaming was not eligible for a

    Category 3 License. And Meadows obtained

    intervention status in the Application of Woodlands

    Fayette, LLC on the grounds that Woodlands Fayette,

    LLC was not a well established resort hotel.

    They have no eligibility argument.

    They have no interest in Tower Entertainment and even

    if the Board were to grant intervention in the other

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    applications we would ask that the Board deny an

    intervention in Tower Entertainment's application.

    Thank you.

    CHAIRMAN:

    Thank you.

    ATTORNEY DONNELLY:

    Mr. Chairman, may I reply one minute?

    CHAIRMAN:

    Tell you what, why don't we get the OEC

    first and then we'll give you one minute?

    ATTORNEY MILLER:

    Trying to step on my toes again. Mr.

    Chairman and members of the Board, we really don't

    have a dog in this fight other than to make sure that

    the Board is aware of our position with regard to the

    regulations and Sugarhouse's compliance with the

    same. As is explained in our answer and objection,

    we believe that Sugarhouse has simply not met the

    requirements for intervention in a licensing hearing.

    And we don't believe it's an abuse of the Board's

    discretion to deny the petition. However, if the

    Board were to grant intervention to Sugarhouse we ask

    that the Board not give them any competitive

    advantage over the other Applicants. Providing

    discovery to Sugarhouse, providing Sugarhouse the

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    means of obtaining documents which they're not

    entitled would give them such a competitive

    advantage, and we ask that if the Board were to use

    their discretionary powers to grant intervention that

    they deny the right to discovery or any other method

    of obtaining a competitive advantage by Sugarhouse.

    Thank you.

    CHAIRMAN:

    Mr. Donnelly.

    ATTORNEY DONNELLY:

    One minute.

    CHAIRMAN:

    One minute.

    ATTORNEY DONNELLY:

    In our written statement we did address

    a direct, substantial, immediate standard. We did

    not --- although I disagree I think the standard is

    direct. We addressed it and I think we meet it.

    Number two, the Board does have discretion, I think,

    but it would be an abuse of discretion and Bensalem

    makes very clear it would be an abuse of discretion

    to turn down this application. Number three, the

    argument that the law mandates that this second ---

    this license be reissued, that's in litigation right

    now. And that's an opinion that's held by persons.

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    But other people have different opinions, so that ---

    we're not commenting on that litigation. We do know

    it's in litigation.

    To the extent that Penn says that we

    don't believe that there's a problem with their

    application, that's not correct. We do believe

    there's a problem with their thing. And then finally

    just close up, again, I come back to the case law I

    think which was very clear that we've met the

    standard for intervention.

    CHAIRMAN:

    All right. Thank you, sir. Questions

    from the Board? Ex-Officio members? Thank you,

    ladies and gentlemen. The matter's now closed. I

    note it's 1:25. The Board will take a recess why

    don't see say 'til 2:15. And when we come back we'll

    begin today's public meeting. So we're in recess

    until 2:15. Thank you all.

    * * * * * * *

    HEARING CONCLUDED

    * * * * * * *

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    14:27:55

    SARGENT'S COURT REPORTING SERVICE, INC.(814) 536-8908

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    CERTIFICATE

    I hereby certify that the foregoing proceedings,

    hearing held before Chairman Ryan was reported by me

    on 1/8/2014 and I Lacey C. Gray read this transcript

    and that I attest that this transcript is a true and

    accurate record of the proceeding.